Nvidia is preparing to re-enter China’s AI chip market with its H20 processors, following the Trump administration’s decision to lift export restrictions imposed in April.
While the move may recover part of the billions in losses the company flagged earlier this year, analysts warn the US firm may struggle to reclaim its former dominance.
Bernstein forecasts Nvidia’s AI chip market share in China will slide to 54% in 2025 from 66% in 2024, as domestic rivals strengthen their foothold.
Regulatory scrutiny from Beijing and the rapid rise of Chinese AI chipmakers are expected to further complicate Nvidia’s return to a market it once dominated.
H20 chips to resume sales but face fierce competition
The export clearance follows the administration’s announcement of a new “fully compliant” made-for-China AI chip.
Nvidia had pushed for the rollback, with CEO Jensen Huang arguing that export controls were hampering US technology leadership and threatening the company’s long-term global position.
However, Bernstein’s analysis suggests Nvidia’s comeback will be tempered by the growth of Chinese firms such as Huawei, Cambricon, and Hygon, which have gained market share during the export ban.
The brokerage estimates China’s localisation ratio in AI chips will rise from 17% in 2023 to 55% by 2027, reducing reliance on foreign suppliers and shifting the balance of technological influence in the sector.
US policy shifts may shape long-term market access
Bernstein’s projections assume current US export controls remain largely unchanged.
If restrictions are relaxed further, US companies could retain a stronger foothold in China.
Rhodium Group has suggested a “sliding scale” export policy could emerge, allowing more chip sales to China to preserve US geopolitical leverage and counter domestic competition.
Trump administration officials have described the H20 export resumption as part of broader trade negotiations.
While some analysts, such as The Futurum Group’s Daniel Newman, believe Nvidia could recover faster, they also note that customers who have adapted to domestic Chinese chips may not return, particularly if local alternatives continue to improve rapidly.
Beijing scrutiny adds another hurdle
Even with renewed market access, Nvidia faces fresh oversight in China.
The Cyberspace Administration of China confirmed that Nvidia representatives met Beijing officials on Thursday to discuss national security risks linked to the H20 chips.
Authorities raised concerns over potential “backdoors” that could allow US entities to access or control the processors.
This comes as the US considers legislation requiring semiconductor makers to build security mechanisms and location verification into advanced AI chips.
Nvidia has denied that its products contain any such vulnerabilities, stating that the H20 meets all regulatory and compliance requirements for the Chinese market.
Domestic push for AI independence
Beijing’s regulatory stance signals a continued drive toward self-sufficiency in AI infrastructure, even with foreign chip supply resuming.
Industry experts expect the Chinese government to maintain incentives and policy support for domestic chipmakers, ensuring that localisation remains a strategic priority.
The emphasis on homegrown technology could make it increasingly difficult for foreign firms to regain lost market share in the years ahead.
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